Restructuring of the sales department in a wholesaler
We changed the commission model to be based on margin, not turnover. After 4 months, operating profit increased by 14%, with the same sales team.
We entered Eco-Dystrybucja at a time when their net profit had stood still for 2 years. Salespeople focused on making the invoice as high as possible, completely forgetting about logistics costs and discounts.
The challenge
The company employed 12 field salespeople, who generated about 1.2 million PLN turnover per month. The problem was that the operating margin fell to 1.8%. Salespeople gave out discounts without control, just to close the sales plan. Additionally, they lost 47% of their working time servicing small orders from 14 most demanding clients, who brought the company a loss on a yearly scale.
Our approach
We started with hard data. We analyzed 1,564 recent invoices for real profitability after taking into account transport costs. For 3 weeks, we checked the routes of delivery cars. It turned out that salespeople were sending goods to the other end of the province with zero profit because 'the client asked'. We introduced a new spreadsheet that showed the salesperson the profit from the transaction before issuing the document.
The solution
We implemented a new bonus system. Commission is now calculated from the earned margin, not from the amount on the invoice. Salespeople received a clear signal: it's better to sell less, but more expensive. We cut off cooperation with a group of 14 clients who regularly generated logistics losses. We simplified the reporting process – instead of 4 reports a day, salespeople now fill in one, which takes them 6 minutes in the morning.
Results
124 days after implementing the changes, the company recorded a clear jump in profitability. The sales team remained the same, but their work became more organized and focused on a specific financial result, not empty numbers.
Timeline
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June 2024Profitability audit of 1,564 invoices and analysis of logistics routes.
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July 2024Development of a new commission regulation based on margin.
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August 2024Training for 12 salespeople and implementation of a profit calculation tool.
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October 2024First full quarterly settlement with a 14.2% positive result.
"I looked skeptically at the commission change because I was afraid of a rebellion from the staff. But Management Eagle showed me in black and white that we were paying extra for the business. Now the salespeople watch the margin better than I do."